European Central Bank Executive Board member Benoit Coeure said common euro-area debt issuance could only follow deeper political integration in Europe.
“Common funding instruments would require shared decision making on national debts and deficits and probably joint control on fiscal expenditures and taxation,” Coeure said in a speech in Rio de Janiero today, according to a text provided by the Frankfurt-based ECB. “They can only result from further political integration; they cannot precede it.”
Coeure also said joint debt issuance cannot be a substitute for “putting national fiscal houses in order and restoring competiveness.”
He said it would be helpful if Europe’s permanent rescue fund, the European Stability Mechanism, could directly inject capital into troubled banks.
“Of course, such support must come with strong conditionality and control,” Coeure said. “Let me note that depending on its design, the financial union could introduce additional elements of risk-sharing among euro-area countries, and as such, it should be subject to strong democratic accountability and control at national and European level.”